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This is the Kodak Moment for the Auto Industry

Plug-In Drivers Not Missin' the Piston Electric vehicles are here to stay. Their market acceptance is currently small but growing...

Sunday, May 21, 2023

There's Not Enough Infrastructure For EVs


Electric Vehicle charging locations in the US from Energy.gov 

If you drive an EV, you've heard someone say, "I'd like to drive an EV, but there's no place to charge them up." This outdated mantra has been getting an extra layer of play around here recently since Oregon declared that the sales of gas-powered cars would stop in 2035. 

It is simply not true. It was true 10 years ago, but a lot of things have changed in the last decade. 

The above map is from energy.gov.  

Other than the charging desert in north central Montana, you can drive just about anywhere in the US and find a place to plug in! So if you hear someone say there's no place to plug-in, you can tell them they need to gather new evidence and update their priors.

Monday, May 1, 2023

What Makes Tesla Different - The Agile Manifesto

There are a lot of things that make Tesla different from legacy auto makers: direct sales, marketing methods, design minimalism... In this post we'll look at product development methods. 

Agile is a software development process that started in 2001. The method allows new software to be released every two to four weeks. This method was widely adopted by the software engineering community because it delivered results. Prior to Agile, most software was written in a Waterfall method.

With Waterfall, as the name implies, requirements come from the top down. The elaborate requirements and specifications were argued over and documented before software development even started. Then when the documentation was complete, software development began. Coding to the Byzantine documentation can take months. During this time the external world changes: new technologies emerge, new customers are courted, new competitors' products are released... this all means that new requirements emerge. This would effectively reset much of the Waterfall project. So the requirements would then have to be rewritten, or (more realistically) re-argued. Now, however, there are competing agendas. Should the development team address the new needs meaning the schedule will be delayed, or should they complete the original vision knowing that it would be lacking areas that are currently relevant to customers. This dilemma is why most Waterfall projects of any notable size are significantly late and over budget.

The Agile method turns Waterfall on its head. The team creates a minimum viable product and then performs short development cycles called sprints to add and improve features. In each sprint, the direction can change to keep up with the changing world and at the end of each sprint there's a viable product to release to customers.

Agile Scrum Process

Tesla took this software development method and applied it to all of their products. And then they customized and improved the Agile process for their own needs. They came up with a method called "mobbing" that allows the right size team to work on a project and allows the work on it to pass from shift to shift (hot passing) to allow 24-hour progress on tasks. 

The car model year system used by legacy automakers is a Waterfall process. In the upfront phase, designs are proposed, debated, documented, and tested. Requirements, tooling, fixtures, processes, parts, design, interfaces, and logistics are planned are all done before production starts. Experimentation, learnings, and improvements can only be done upfront. Once production starts, the design and production lines are frozen; changes are minimized. 

However, unlike a waterfall software project, car model years cannot be late. So to meet this schedule requirement, changes are kept to a minimum, even during this upfront phase. This limits the legacy automakers' ability to make significant changes to their vehicles.

The Agile process (or more correctly the Tesla-modified Agile process) does not wait for model years, so Tesla does not use model years. When something can be implemented that makes the car better, it is implemented, tested, and deployed. Rather than waiting for the next model year, improvements are slip- steamed into the vehicle line dynamically. A car built in the 10th week of the year can be radically different from one made in the first week of the year. Tracking each individual car (how it was built, the parts that went into it...) would be a daunting task for a 1950s legacy car company. However, this is an easy task for a technology company.

Given this radical pace of change, how can vehicle quality be maintained? Unit tests. Before any part changes or new software are deployed, a test is written and incorporated into the car. This test knows how to determine the parts present in the car and then check their functionality. This means as a car is built, it can test itself. It can make sure all the needed components are present, acting as expected, and that the various components can talk to each other as expected.

Built-in self-tests allow for rapid feedback. Rapid feedback allows for experimentation. Experimentation enables innovation. This is the key to Tesla's rapid pace of innovation.

These built-in automated self-tests allow for rapid feedback. Rapid feedback allows for experimentation. Experimentation enables innovation. This is the key to Tesla's Agile Dev Ops method. 

The pace of innovation allows problems to be solved, costs to be reduced, and the product to be improved. Tesla has a motto that cost reductions cannot reduce the ownership experience. Changes need to both reduce cost and improve the experience. Focusing on both prevents either one from running away. It's easy to reduce costs if you don't consider the user experience. Similarly, it's easy to improve the user experience if you ignore cost.

Having a rapid pace of change inherent in the system has other advantages too. When the supply chain problems hit in 2021, Tesla was able to adapt. Rapid innovation combined with their vertical integration, allowed them to change to new control chips when the ones they had been using were not available. They had to change their software, but when the built-in self-tests passed, they can have a high level of confidence in the new hardware and software components.

Tesla is fundamentally different from other automakers.

Disclosure: I am long Tesla

Sunday, April 9, 2023

I Like Big Batteries - Battery Prices Will Drop (3/3)

Battery Prices Will Drop

In part 2, we looked at the spike in battery material prices in 2022. The good news is that was a temporary spike.

One of the biggest barriers to widespread EV adoption has been the high cost of batteries. The good news is these prices are dropping and over the next decade, we can expect this trend to continue, making EVs more affordable than ever.

The cost of lithium-ion batteries has already dropped by over 80% in the last decade. This is due to a combination of factors, including improvements in technology, increased production volumes, and economies of scale. As battery manufacturing becomes more efficient and the demand for EVs continues to grow, prices will continue to decline.

BloombergNEF tracks and forecasts lithium-ion battery prices. Battery prices were above $1,200 per kilowatt-hour in 2010. By 2021, they had fallen 89% in real terms to $132/kWh. The price could be as low as just $62 per kilowatt-hour by 2030. McKinsey estimates that battery prices could be as low as $50/kWh by 2030.

Wright's Law

Another concept that will play a role in the declining cost of EV batteries is Wright's Law. Wright's Law, also known as the learning curve effect, states that as production volume increases, the cost per unit decreases at a consistent rate.

This principle has been observed in many industries, including the auto industry, where the cost of production decreases as the number of cars produced increases. As more EVs are produced and demand for batteries grows, we'll see a similar effect on the cost of batteries.

The battery market was ~700 GWh in 2022 and it is expected to grow to nearly 5 TWh by 2030. That's a factor of 7 in growth, a lot of opportunity for learning curve effects. 

According to a study by the National Renewable Energy Laboratory, the cost of battery packs could decline by up to 30% for every doubling of cumulative production. This means that as the production of EVs increases, we'll see a significant decrease in the cost of batteries.

Battery Recycling 

Another important factor to consider in the declining cost of EV batteries is battery recycling. As more EVs are produced and the demand for batteries increases, it's important to develop strategies for dealing with end-of-life batteries. This is where battery recycling comes into play.

Battery recycling involves recovering valuable materials, such as lithium, cobalt, and nickel, from used batteries and then using these materials to make new batteries. This not only reduces waste but also helps to reduce the overall cost of batteries by reducing the need for new materials.

Redwood Materials’ Battery Materials Campus 1 is still under construction in Northern Nevada, but in late 2022 it had already started producing recycled battery materials. The recycled products are sent to one of the largest battery plants in the world, Tesla's Gigafactory Nevada.

Recycling will help to reduce the cost of batteries (big and small). Furthermore, recycling also has significant environmental benefits. It reduces the amount of waste going into landfills, reduces the demand for new materials, and reduces the carbon emissions associated with mining and manufacturing new batteries.

J.B. Straubel, founder of Redwood Materials and former Tesla CTO, recently said, “Batteries are amazing because they are so recyclable. More than 90% of the critical materials in the battery can be reused many, many times without degradation. Today, the batteries that we buy and put into our products admittedly still have a pretty small recycled material content, but this is changing fast… We’re demonstrating and showing that you can make batteries that have very high percentage (of recycled materials) and still have extremely good performance and exceptional life.” 

Overall, battery recycling is an important part of the EV industry's efforts to make EVs more sustainable and affordable. By recovering valuable materials and reusing them to make new batteries, we can reduce waste, lower costs, and reduce the environmental impact of EVs.

Wrapping It Up

We have many problems that require big batteries to solve: personal transportation, freight transportation, residential energy storage, and industrial energy storage. 

Big batteries are being used to stabilize the grid and to put more renewable energy on the grid. This makes all the other batteries that the grid powers even cleaner. 

Even using today's grid, electrifying semi-trucks will allow goods to be delivered with far fewer emissions. Battery-powered semis will mean that particulate matter emission will be removed from population centers.

So, what does this mean for consumers? For starters, it could make EVs more affordable for a wider range of people. Currently, the cost of a new EV is out of reach of many buyers due primarily to the cost of the battery. However, as battery prices drop, the upfront cost of EVs will shrink.

Lower battery prices will also enable energy storage, long-haul trucking, and more to be battery-powered. 

Battery materials are being extracted today, but (unlike fossil fuels) they are not consumed. At the end of a battery's useful life, the materials will be recycled and used in the next generation of (even more efficient) batteries. This will eventually create a closed-loop system. We'll have moved past an extractive (mine and burn) economy. 

In conclusion, the decline in battery prices over the next decade is an exciting development for the EV industry. As prices drop, we may see more people adopting EVs, leading to a cleaner and more sustainable future.

Three Parts: 

Sunday, March 19, 2023

I Like Big Batteries - We Demand Supply

The Supply Crunch

EV popularity is increasing. EV sales from 2012 to 2021 are up 13 fold and the upward trend seems unstoppable. Well, almost unstoppable; there may be one thing that could slow this trend: battery cell availability. 

Battery materials (such as Nickel, Lithium, and Cobalt) costs have skyrocketed over the last two years. Prices are being driven by high global demand and a tight supply of refined materials. Lithium carbonate prices per tonne were up 88% year-to-date in October of 2022.

As you can see in the two graphs below, in 2022, Nickel hit a 10-year high and Lithium hit an all-time high. 

Nickel price history via tradingeconomics.com

Lithium Carbonate price history via tradingeconomics.com

But all is not lost.

More Mining, Refining, and Recycling

Obviously, these higher material costs are not going to help make EVs or energy storage more affordable, but there is a plus to the higher prices. Inflated prices mean it's more profitable to mine and refine these materials. This will bring in more investment and more of the needed materials. 

Once these materials are mined and in batteries, they will be available for this generation of battery tech and the next and the next, ad infinitum. These materials are not consumed like fossil fuels. They are not emitted from a tailpipe or smokestack into the atmosphere. The Nickle that is put into batteries today, will be recycled and put into new, better batteries in the next decade.

The increased cost of raw materials also makes it more profitable to recycle batteries. More on recycling later, back to mining and refining.

Caterpillar's First Battery Electric Large Mining Truck

Mining Is Getting Greener 

Most EV makers have goals to have zero emissions manufacturing. This starts with mining. More mining equipment is becoming electrified. In some cases, the very materials they are mining are the same ones used in the batteries powering the mining equipment. 

Normet SmartDrive battery electric mining vehicle

Demand for EV battery raw materials such as graphite, Lithium, Cobalt, and Nickel is currently outpacing supply. According to Benchmark analysts, unless 384 new mines are up and running in the next ten years, the EV transition will be slowed as carmakers struggle to source battery materials. They estimate that 74 Lithium mines, 62 Cobalt mines, 72 Nickel mines, and more than 100 graphite mines and production plants are needed. 

For comparison, there are currently about 3,760 active coal mines. So, assuming the above estimates are correct, EV batteries will need about one-tenth the number of mines that are currently active, just for coal. 

Battery Recycling 

The good part about these battery materials mines is that they are not consumed after they enter the battery lifecycle stream. The materials can be recycled and placed in new batteries after they degrade beyond usefulness. It can become a closed loop. So unlike coal mines, these materials will reach a state where nearly all of the needed materials can come from recycling streams; rather than a never satiated gaping maw. 

The recycled material streams will be of higher purity since the recycled materials have effectively been refined multiple times and this will result in better batteries. Additionally, recycled materials will be less subject to supply chain disruption and more affordable than newly mined materials. The recycling plants will be near where the batteries are produced, rather than wherever the random vein of various materials happens to lace the Earth.

"Ephemeralization" - computers from the 1960s used to take up an entire room, now the smartphone in your pocket has far more computing power. This same march of progress is happening for batteries, albeit at a slower pace. Battery energy density is increasing by about 5% each year. 

This wraps up part 2. Part 3 (prices will drop) is coming soon.

Three Parts: 

Sunday, March 12, 2023

I Like Big Batteries - Why

Today, we use batteries in everything from our electronics (phones, watches, tablets, earbuds), to power tools, toothbrushes, and electric cars. Battery tech is more important to our daily life than it's ever been. And now that the tech is maturing, it is being bundled together into bigger batteries than ever before for new purposes.

We'll look at how batteries, specifically big batteries, are being used and (more importantly) how this is laying the foundation for the "Electrify Everything" future. 

Why Big Batteries...

Two primary markets use big batteries: energy storage (residential and industrial) and long-range electric vehicles (personal transportation and transportation of goods).

Battery-based energy storage is vital to our renewable energy future from moving people and goods to smoothing out the intermittent nature of renewable energy. For transportation, to replace all the towing, hauling, and road trips that internal combustion vehicles are used for today, we're going to need EVs with big batteries. For renewable energy to power the lights, air conditioners, and heat pumps in a major city, we're going to need big storage batteries.

Grid Stabilization & Renewable Energy Storage

The sun doesn't always shine and the wind doesn't always blow, but this does not mean renewables are unviable. A big battery can fill in the gaps and absorb the excesses. This applies to whether it's industrial-scale wind or home solar. 

Power inverters outside the battery building at Moss Landing Energy Storage Facility in Moss Landing, California. Credit: David Paul Morris/Bloomberg via Getty Images

Industrial Energy Storage

One example of a massive industrial-scale battery is the Moss Landing Energy Storage Facility in California. It has 4,500 lithium-ion battery racks stacked for a total of 1.6 GWh of capacity. This battery bank can fill in when there are short-term outages, it can maintain the grid frequency, and it can make a renewable portfolio a viable part of the grid production. Fully charged, this facility could power over half a million homes for 24 hours.

Home Energy Storage

Residential batteries are great. They allow you to time-shift your grid usage to the cheaper hours of the day and provide you with blackout protection. We've had home batteries for about 2 years. These batteries kept the power on when snow and ice took our grid down on Valentine's Day 2020, they make our solar production more valuable, and they charge up (just in case) when wildfires plague the state.

In addition to this blackout protection, the time-shifting ability makes our solar worth about 75% more, since we can use solar energy when prices are the highest, instead of just when the sun is shining. 

Measured in mere kilowatt-hours, residential batteries have far less capacity than an industrial energy storage system (measured in gigawatt-hours), but there are far more residential installations and these little residential packs can be ganged together into a virtual power plant, working together to significantly offload the grid during peak demand periods. 

Big Batteries Can Move People and Goods

Batteries are the powerhouse for the future of transportation from scooters to semi-trucks. Personal transportation, hauling, towing, deliveries, and more will be battery-powered.

Personal Transportation

Recently we published an entry about the need for some people to have long-range electric vehicles. A big battery in your electric ride provides the range needed, even in adverse weather conditions. It provides future-proofing against degradation or the curveballs that life can throw at you (detours, evacuations, new commute due to a new home and/or job...). With a big battery pack, if you can't plug in every night or if you forget to plug in, you're not stranded. 

A personal vehicle with a big battery provides versatility. 

Electric trucks with big batteries are available now and more are coming soon. These vehicles can provide vehicle-to-load (V2L) services, allowing you to plug electrical tools directly into the vehicle. Power your saws and drills right from the truck bed. Have a job site that doesn't have electrical power yet, no need to haul a separate generator, just plug in and get the job done.

With the right equipment, these large battery vehicles can even power your house during a blackout. Vehicle-to-home (V2H) blackout protection is something that only vehicles with big batteries can do.  

Electric Semi-Trucks

On-highway and medium-duty trucks from Freightliner are shipping now. These freight trucks currently have 150kWh to 300kWh of battery capacity depending on the intended use. These are not small batteries.

Tesla's all-electric class 8 commercial semi-truck completed its first 500-mile trip with a full load in November of 2022. The first customer deliveries started in December of the same year. Musk has said that Tesla aims to produce 50,000 semi-trucks in 2024. As I write this, the full specs have not yet been released. However, the pack is estimated to be more than 900kWh. We'll be seeing megawatt-hour packs soon.

Electrifying semi-trucks is very important. Today, semis are primarily Diesel-powered. In the US, they are only about 1% of vehicles on the roads, but they have a very outsized pollution impact; they generate about 20% of vehicle emissions and about 36% of particulate emissions. This directly has an impact on health and air quality.

One additional advantage of electric semis is regenerative braking. Regen braking is nothing new for EVs, but semis take this to a whole new level. Coming down an incline, hauling a heavy load, a Diesel semi will have to use engine braking or jake brakes and brake pads. This creates noise and particulates from the brake pads. An electric semi, on the other hand, will be able to use regenerative braking coming down that same incline. This means at the bottom of the incline, the e-semi will have more charge than it had at the top of the hill and the brake pads will last significantly longer.  

This concludes "Part 1 / Why" of our big battery series. Check out part 2 (Demand) next week.

Thursday, March 2, 2023

Tesla Master Plan 3 is About Moving to Earth 2.0

Earth 2.0 by Dall-e2

Tesla recently held their Investors' Day event. This is where they unveiled Master Plan 3. 

Master Plan 3 was not laid out as simply as the few lines of text that Master Plan 1 and Part Deux, but there were a few clear messages: 
  1. A sustainably powered world can be a world of abundance 
  2. Electricity gets more done with less
  3. Battery energy storage enables a renewable energy economy 

One, A World of Energy Abundance 

Many people think that a sustainable energy future requires a future of energy austerity and deprivation. This is the opposite of the truth, as we've covered previously. When you have a finite energy source, such as fossil fuels, this is when you must ration it, because by definition, you have a limited amount of it and it will eventually run out. 

Two, Met All Your Energy Needs More Efficiently

Today, only about one third of the energy that we use actually does what we want it to. The rest is waste. This is as if you had a car with a big hole in the gas tank. You would get the tank fixed if you were spilling two thirds of the gasoline as you drive. Well, if you drive a gas car, you are spilling 2/3rds of the energy as waste heat. Electric vehicles are the solution. An EV with a 75kWh battery pack is about the energy equivalent to about 2 gallons of gas. Yet it can drive you around about the same as 8 to 10 gallons of gas. Given this efficiency all transportation will move to electrification.  

Similar, ratios exist for home and building heating as well. Heat pumps are the answer there. 

 Three, Big Batteries 

Batteries enable renewable energy. They absorb the surplus and supply power when you need it; all at a rate far faster than any generator could spin-up. This makes the grid more stable, more reliable, and more affordable. Much more on the benefits of big batteries coming to this blog later this month.

No Miracles Required

All of this can be done today and with less mining than our current fossil fuel economy. We have more than enough raw materials available. As lithium prices increased, the amount of reserves increased significantly based on new prospecting. This transition can be done with less (yes, less) investment than we are currently spending on the fossil fuel economy. 

Master Plan 3 is one small step for our planet on the Kardashev Scale.

Sunday, February 19, 2023

The Idling Rich - Carbon & Money

Who will suffer the worst impacts of climate change? The poor. 

Who has the resources to do something to resolve climate change? Certainly, we can all do our part and we can all vote for reasonable climate policy... But the answer for the purposes of this blog post is: The rich. 

The rich are the ones that could afford to build zero-emission apartment buildings, fund eco-friendly start-ups, buy zero-emission fleet vehicles, and so much more. 

The ‘1%’ are the main drivers of climate change, but it hits the poor the hardest: Oxfam report

How do we get people in the second group to care about what happens to people in the first group? 

The jet-setters are flying around for important red carpet events, all-the-while burning jet fuel. The ironic part is that some of them are flying to events where they will be talking about how important it is that we take action regarding climate change. Is that irony or hypocrisy (maybe both)?

There's no question that with more income, quality of life improves (up to a point). Along with this improved quality of life, generally comes an increase in emission output. So, we have to have a system that allows for an improved quality of life, without increasing emissions.

We cannot depend on everyone having personal solar panels and their own new EV. Sure these should be encouraged, but we also need a grid that is renewably powered and zero-emissions public transportation.  

Fossil fuels are only viewed as cheap because the true price includes an environmental debt. One that is not paid at the pump. The externalities for emissions need to be included in that fossil fuel price. This levels the playing field for renewables. 

Sunday, January 29, 2023

EVs for Everyone, Better Batteries :: F, GM, TSLA :: Revisited

 Guess when this was written: 

Now there's a growing demand for electric car batteries. With GM, Nissan, Ford, and Tesla ramping EV production, battery usage in electric cars could begin to drive a meaningful segment of the battery market. As a result, a number of improved battery designs are being developed in laboratories, involving silicon, graphene, and a zinc-air composition to name a few.”
The above is not an exact quote, there are a few tweaks (removing vehicle introductions) so the answer was not too obvious. Drumroll please... This was written on April 12, 2013. 

Even though this is 10 years old, it reads like an article written today. There has been a massive amount of investment into battery research and manufacturing over the last decade, but the demand has been outgrowing the supply. 

The above quote came from The Motley Fool's blog site, but you can no longer find it there. Luckily the Wayback Machine still has an archive of it. Full credit to the author, Alexander MacLennan aka TulipSpeculator1, for spotting this trend so far before it was apparent to everyone.

Why does this matter? The goal is EVs for everyone, whether it's personal vehicles, public transportation, or rideshare; with all of this powered by renewable electricity. However, there are a couple obstacles. 

Why Are EVs Expensive? Batteries! 

EVs have far fewer parts than internal combustion engine (ICE) vehicles. This makes EVs quicker to build; making EV automobile factories more productive.

EVs are easier to design, you don't have to plan around transmissions, drive shafts, large engines, fuel lines, fuel tanks... 

So if EVs have fewer parts and the factories are more productive, why are EVs more expensive? The batteries. Today, batteries are the most expensive component in most electric vehicles, but there's good news on this front.

Battery Prices are Dropping 

The good news is that battery prices are dropping. 

You can see on the graph above, from 2010 to 2020 EV battery prices dropped by over 88%. This is a huge change. This is what allowed Tesla to move from selling $100k Model S and X to selling Model 3 and Y at about half the price, while still making a profit.

This trend is what will allow EVs to become more affordable and replace the vast number of gas vehicles on the roads over the next decade. 

Boom and Bust

Unfortunately, 2022 looks like a year that will not continue this downward battery price trend (as I write this, final numbers are not yet available). The legacy automakers have woken up to EVs; they will not cede the electric market to the upstarts. So now they are trying to ramp up their EV production volumes. This has meant increased competition for battery factory capacity, resulting in price spikes throughout the battery supply chain, from raw materials, to refined materials, to finished goods. 

Here's a chart showing EV sales. Each one of these vehicles has Lithium-ion batteries. Most of these vehicles have thousands of pounds (and thousands of dollars worth) of battery cells.

Via @skorusARK

This increased price does have a silver lining. This price spike will draw in more investments, the production capacity will grow, and then battery prices resume their downward price trend, but now with more production than ever before.

Better Living Through (Battery) Chemistry

Battery technology has been improving each year by 5 to 7 percent. This is true for cutting-edge battery chemistries, but it's also true for older battery chemistries. 

More research funding than ever before is going into battery technology. This includes research into Lithium-Air, Lithium-Sulfur, and solid-state batteries to name a few. One of these might turn out the be the battery of the future, but today there are two general categories for high-production Lithium-ion cells. These are Iron-based chemistries such as Lithium Ferrophosphate (LFP) and Nickel-based such as Nickel Manganese Cobalt (NMC) and Nickel Cobalt Aluminum (NCA).

Each manufacturer has their own twist on the recipe with different dopants, membranes, electrolytes, and the like. But to stay competitive, any advancement made by one will be answered with an analog by the others. 

Most EVs today are made with Nickel-based Lithium-ion battery cells. However, Iron-based batteries are lower cost, have high safety, low toxicity, long cycle life, and more heat tolerance. If Iron-based batteries have all of these advantages, why are Nickel-based batteries currently dominant in the EV market? The answer is weight. 

Paying The Iron Price

Iron-based Lithium-ion batteries are heavier than Nickel-based batteries per unit of energy storage. When the batteries are used in a mobile device (like cars or smartphones), this additional weight is a problem. Heavier batteries take more energy to move, which requires more batteries... this negative feedback cycle limits the practical range of an electric vehicle that is powered by Iron-based batteries.

Improvements to Iron batteries are slowly unwinding this negative feedback loop. Lighter Iron batteries (improved gravimetric energy density) are allowing these batteries to be used in vehicles with a significant range. For one example, Tesla makes a Model 3 Standard Range Plus variant that uses Iron-based Lithium-ion cells in its battery pack. This car has a range of 253 miles. A 253-mile range EV can fulfill many people's driving needs.  

Iron-based batteries are also finding their way into utility-scale storage and backup power applications. For these stationary use cases, the heavier weight is not a significant penalty. But, more importantly (from the EV perspective), this means the Nickel-based cells (that were once used in these stationary applications) are now available for long-range EVs.

Today, Iron-based cells are about a quarter of the battery market and their share is growing. Iron cells are expected to be about half of the market by 2028. This will help make EVs more affordable.

Closing the Loop

The other mega-trend that will help bring EVs to all is recycling. Today, Nickle, Lithium, and other materials must be mined to make batteries for EVs. The good news is that the packs in each EV that going onto the roads today will be able to be recycled into new batteries. Unlike gasoline cars that have an unquenchable thirst for drill baby drill; EVs will reach a steady state.

One of the best aspects of recycling is that it can be done locally. Today, the materials in EV batteries make the equivalent of several trips around the world before being delivered to a final customer. Battery materials recyclers, on the other hand, will be located near battery manufacturers. Reducing these material road miles will reduce the price of new batteries.


Better Batteries: The materials in EV batteries are highly recoverable. Two things to consider: one, the average lifespan of a vehicle is 12-14 years; two, EV batteries have been getting better by 5% to 7% each year. Adding these two together means that when an EV that's seen a dozen years or more gets recycled, the materials in there will be able to power ~two similar range new EVs. Batteries that use half the amount of materials will cost less. 

When there's a river of end-of-life EVs coming off the roads, recycling this high-grade material will be cheaper than mining virgin raw materials. This will further help drive down EV prices. This provides a positive feedback loop: more EVs on the road, supplying more recyclable materials, making EVs more affordable, which puts more EVs on the roads. This is how we get to "EVs for Everyone." 


Tuesday, January 10, 2023

2023 Tesla's Two Million Vehicle Year!

Last year, we wondered if Tesla would be able to produce 2 million vehicles in 2022. Our determination and that it wouldn't happen in 2022. Tesla's final production number for 2022 was 1.369 million. 

Now we're asking the same question for 2023 and it's a real possibility for 2023. 

Tesla's Guidance 2.05 M

Tesla's general guidance is for 50 percent growth. Applying this to guidance to last year's number is 2.05 million vehicles. 

Exponential Growth 2.18 M

Looking at the chart above, plotting an exponential growth model on it and the forecast is production of 2.18 million. This is 130,000 more than Tesla's guidance. 

Linear Growth 1.86 M

Tesla is NOT in the linear growth phase, but this will provide a floor for a bad year. The result is a forecast of 1.86 million vehicles. 

Other Factors

Both Gigafactory Austin and Gigafactory Berlin will be ramping production this year. 

To truly model this in detail, each of the production lines would need to be modeled. The mature lines would have little to no growth; whereas the new production lines will be growing significantly. 

The last few years have been a mess. Supply shortages, pandemic shutdowns... there's no guarantee that this year will be any different. A new variant could pop up and cause similar problems or another force majeure event could occur; so as we often say here, the only thing we know for sure is that there will be plenty of twists and turns. 

This is the year the Cybertruck is expected to start shipping. Trucks are the best selling vehicle in the US. Production could mean a big bump in sales. How fast Tesla can get to volume production will be a significant factor. 

Semitruck: Tesla has begun shipping their Semi. Each one has about a dozen car's worth of battery cells. If there's a cell shortage and Tesla has Semi delivery commitments, this could impact Tesla energy products or in the unlikely worst case, vehicle production. 

Wrapping Up

We've generated estimates from 1.86 million to 2.18 million. Will this be the year of 2 million vehicles or will they just miss it the same way that 2021 just missed the 1 million mark? We shall see. After the world of craziness of the last few years, I think we've earned a calm year of steady growth and that results in Tesla nailing their guidance at 2.05 million. 

Disclosure: I am long Tesla

Sunday, January 8, 2023

Energy Portfolio - Solar, Wind, & Batteries

“Don't put all your eggs in one basket.”

That ol' phrase is good advice for many things in life. One example is investing. A mutual fund is a basket of different stocks. This is safer than owning just an individual stock. To be even safer, you could hold a combination of stock mutual funds, bonds, and cash. If stocks are down, maybe bonds are up. If both are down, well at least you still have the cash. But this is not a financial blog and that's not financial advice, so let's move on to our usual topics EVs and Energy. 

This same diversity of assets lesson is now being applied to renewable energy. 

Oregon Public Broadcasting (OPB) reported that Portland General Electric, the largest utility in Oregon, is building a large-scale wind, solar, and battery facility.

OPB says, “Nestled in the hills of Morrow County, hundreds of solar panels and wind turbines are generating a product that will soon be in high demand around the state — clean electric energy.”

This is the diversified energy portfolio: solar, wind, & batteries.

Wind: Morrow County, Oregon is near one of the best windsurfing regions on the continent in the Columbia River Gorge.

Sun: Morrow County is also in the sunny eastern part of Oregon (really, it's not all rainy there).

Batteries: The 30 MW/120 MWh of batteries here will absorb the surplus energy when the sun and/or wind are making more than the grid needs. And it will fill in the gaps when the wind dies down or clouds pass over.

The goal is to have this site supply renewable energy 24 / 7 / 365.

With renewable energy, just as with investing, if reliability is your goal, diversity is a good thing. This is an energy portfolio of solar, wind, and batteries. Continuing the investing analogy, you can think of the solar panels as stocks, they are great when the sun is shining. The wind turbines are like bonds, they're not as sexy, but they are less volatile and often perform when stocks/solar don't. And finally, we have batteries, they are like cash-on-hand, you know exactly how much you have and you can save it or spend it as needed at your discretion.

Ok, enough for the finance talk. Solar, wind, and batteries complement each other well. The solar panels will generate energy during the day and (of course) nothing at night. This generally scales well with increased daytime energy use. Solar also scales seasonally with more generation in the summer when the air conditioners are humming. Solar production is significantly diminished in the winter up here north of the 45th parallel; however, this is when the winds tend to really blow. And finally, you have batteries to fill in the gaps and absorb the excess.

A surprisingly small amount of energy storage (batteries) will make a big impact on the grid; this will be a game-changer for renewables on Oregon's grid. Batteries are what changes renewables from a volatile source that spikes the grid with power one moment, then little to none the next moment, to something that the grid can use to add stability. Batteries are instantly dispatchable. I call this digital energy.

Managing batteries is a new challenge for electric utilities. There are lessons yet to be learned. Such as where's the best place to physically locate the batteries? Is it at the generation location (as in this facility) or should the batteries be closer to the consumption location? Or some combination?

Oregon's last coal plant closed in October 2020. This new installation is about 30 miles from the shuttered coal plant. My favorite part of this story is that the transmission lines that once carried the dirty energy from the coal plant will now transmit renewable power from this renewable energy farm.

Right now, we have the technologies that are needed to move to a future free from fossil fuels. We don't have to wait for fusion or some other big breakthrough. Let's put the resources that we have, here and now, to work. Most deployments are held back by a lack of political willpower, not a missing technology. 

Here in Oregon, we have the political will, and our major electric utilities are required to move to emission-free generation. The Clean Energy Targets bill (HB 2021) requires utilities to reduce emissions as follows: 

  • 80% below baseline emissions levels by 2030
  • 90% below baseline emissions levels by 2035
  • 100% below baseline emissions levels by 2040
That means the generation that's born about a generation from now might be referred to as the clean-generation generation.